Berkshire’s Media Buys Might Show Buffett’s Influence Is Waning

by Jeff Reeves | February 15, 2012 11:25 am

Berkshire’s Media Buys Might Show Buffett’s Influence Is Waning

Billionaire investor and Wall Street icon Warren Buffett always has had a soft spot for the media business, judging by his actions over the years. In early 2011, Buffett retired from the board of The Washington Post Co. (NYSE:WPO[1]) after a “great 37 years.”[2] — but said he would hold onto the stock.

And then there’s one of my favorite quotes from the Oracle of Omaha: “The smarter the journalists are, the better off society is. For to a degree, people read the press to inform themselves — and the better the teacher, the better the student body.”

Now we just learned in the most recent Berkshire Hathaway (NYSE:BRK.B[3], BRK.A[4]) filing that Buffett’s company added a position in Liberty Media Corp. (NASDAQ:LMCA[5]), the company behind Starz, and raised its DirecTV (NASDAQ:DTV[6]) stake.

A casual observer might think Buffett is making a big media push. But the reality is that recent moves at Berkshire might not be the actions of Warren Buffett, but his soon-to-be-successor.

Here are the specifics on the recent investments: Berkshire bought about 1.7 million shares in Liberty Media — a company that maintains ownership in everything from the Atlanta Braves to Sirius XM Radio (NASDAQ:SIRI[7]) to cable networks like Starz.

Also, Berkshire raised its stake in satellite broadcaster DirecTV nearly five-fold, taking a position of nearly $1 billion that would make it one of the 10 largest shareholders in the company.

The most interesting rub, however, is not the dollar amount or the shares purchased. The drama comes from the fact that the moves aren’t as much the doings of Warren Buffett as they are the efforts of protégé Todd Combs. Combs is the investment manager Berkshire brought on to help plan for life after Warren Buffett.

It’s morbid to say, but a reality: Buffett is 81 and won’t be around forever to lead the company. And Combs clearly is trying to make his mark on the company through big moves. Under his leadership, Berkshire Hathaway raised its stake dramatically in Intel (NASDAQ:INTC[8]) and General Dynamics (NYSE:GD[9]). It also took a new stake in dialysis provider DaVita (NYSE:DVA[10]).

Warren Buffett traditionally has not favored these investment sectors, preferring financials, consumer goods or industrials. But Combs has dived into tech and media, even while slashing portfolio mainstay Johnson & Johnson (NYSE:JNJ[11]) by 23%. Berkshire also sold its entire position in Exxon Mobil (NYSE:XOM[12]).

Are these recent buys a sign of the new Berkshire? Maybe.

But they also could just be a sign of the times — an opportunity for Berkshire to branch into different industries after one of the worst economic downturns in almost a century. No investment thesis lasts forever.

The real test for investors, of course, will not be the flavor of stocks that Todd Combs pursues or whether he can match Warren Buffett’s folksy charm. The billion-dollar question Berkshire shareholders are going to be asking is whether these buys will pay off in the long run.

Jeff Reeves[13] is the editor of InvestorPlace.com. Write him at editor@investorplace.com[14], follow him on Twitter via @JeffReevesIP and become a fan of InvestorPlace on Facebook. As of this writing, he did not own a position in any of the aforementioned stocks.